Daily Market Outlook, April 26, 2022

Daily Market Outlook, April 26, 2022 Overnight Headlines China Central Bank Seeks To Calm Markets With Support Pledge Japan Readies $48bn Package To Ease Inflation Pain - Nikkei Goldman Sachs Now Sees ECB Hiking Interest Rates In July Oil Advances As Investors Weigh China’s Covid-19 Resurgence Dollar Ascends On China Covid Fears, Fed Rate Hike Pace Asia Shares Edge Up, Sentiment Fragile On China Growth Fears HSBC Quarter 1 Profit Slides As Ukraine Conflict, Inflation Bite UBS Posts Surprise 17% Q1 Profit Rise, Santander Q1 Profit Rises 58% Whirlpool Cuts Full Year Sales View, Reviews Europe BusinessThe Day Ahead Asian shares bounced up on Tuesday after a late revival on Wall Street, though global growth fears stoked by China's strict COVID-19 curbs and an expected streak of aggressive Federal Reserve tightening sapped risk appetite. The nervousness about China's economic slowdown, however, hit Australian shares, with the local benchmark down 2% by early afternoon, hurt particularly by declines in miners. Japan's Nikkei stock index pared earlier gains and was down 0.04% by early afternoon. U.S. stock futures were little changed in Asia trade.The lockdown in Shanghai, and the spread of cases in other big cities like Beijing, is weighing on the growth outlook for the world's second largest economy and investment sentiment. Markets have also been fretting that an aggressive pace of tightening by the U.S. Fed could derail the global economy, which has only just started to recover from the pandemic. The Fed is expected to raise rates by a half a percentage point at each of its next two meetings. Lockdown in China's financial hub has dragged into a fourth week, as authorities stick to their "dynamic zero-COVID" policy to combat the latest outbreak of Omicron cases. In currency markets, the dollar was in fine fettle on safe-haven demand. China's offshore yuan was steadier, at 6.5558 per dollar after the People's Bank of China said late on Monday it would cut the amount of foreign exchange banks must hold as reserves.That helped it recover from a year-low of 6.609 per dollar on Monday, hurt by fears about China's economic growth. The dollar was higher against most peers, with its index against a basket of rivals at 101.58, just off its overnight two year peak. Benchmark U.S. 10-year yields ticked up to 2.8566% in early afternoon deals. Treasury yields retreated on Monday from hawkish Fed-induced highs, as the China lockdown and growth fears sent investors to the safety of U.S. bonds. US releases include durable goods orders and new home sales data today, as well as the Conference Board consumer confidence report. Durable goods orders are expected to partially recovery from the drop in March, but markets will be looking to see to what extent geopolitical uncertainties and supply bottlenecks will restrain activity going forward. For US housing, sales overall seem to show some signs of higher interest rates already having an impact, although housing starts appear to be holding up for now. US consumer confidence, meanwhile, is expected to broadly steady in April with the strong labour market providing an offset for concerns about inflation. The Conference Board measure has not fallen by as much as the University of Michigan survey which showed an unexpected rise in consumer sentiment in April.FX Options Expiring 10am New York Cut EUR/USD: 1.0700 (757M), 1.0725 (815M), 1.0735 (461M) 1.0750 (1.05BLN), 1.0785-90 (500M), 1.0795-05 (2.07BLN) 1.0900-10 (560M), 1.0995-00 (544M) USD/JPY: 126.75-80 (850M), 128.00 (655M) GBP/USD: 1.3170 (200M) AUD/USD: 0.7125 (298M), 0.7145-50 (574M) 0.7170 (395M), 0.7220 (1.22BLN), 0.7350 (741M) 0.7370-75 (754M). AUD/JPY: 88.25 (684M), 90.80 (703M) USD/CAD: 1.2675 (655M), 1.2785 (740M) NZD/USD: 0.6830 (565M). AUD/NZD: 1.0800 (396M)Technical & Trade ViewsEURUSD Bias: Bearish below 1.12 Bullish above EUR/USD opened -0.90% at 1.0712 after USD and JPY surged across the board After trading 1.0707 it tracked higher led by a 0.5% drop in USD/JPY USD selling continued, as risk assets steadied and USD/CNH fell from highs EUR/USD is trading close to the 1.0735 session high into the afternoon Resistance is at former support at 1.0755/65 where sellers are tipped EUR/USD trending lower with the 5, 10 & 21-day MAs in a bearish alignment Only a break above the 10-day MA at 1.0804 would suggest bottom is forming The next level of decent support is the 2020 low at 1.0636GBPUSD Bias: Bearish below 1.3350 Bullish above. +0.2% with a softer USD amid profit taking on short yuan and yen positions Trades at he top of a 1.2732-1.2772 range with consistent flow in Asia UK cost of living crisis will hit economic growth hard - poll Poll justifies the cautious outlook of BoE Governor Bailey Charts; momentum studies, 5, 10 & 21 day moving averages head lower 21 day Bollinger bands expand - strong bearish trending setup Targets a test of 1.2496, 61.8% of the 2020-2021 rise Close above 1.3028 21 day moving average would end downside biasUSDJPY Bias: Bullish above 120 Bearish below USD/JPY heavy but downside limited, 127-129, 127.50-129.50 core range still USD reverses lower after good buying yesterday, helps major ex-JPY up Risk back on following Wall St reversal up, Nikkei +0.5% @26,726 JPY crosses base for now, major reason behind USD/JPY push down yesterday USD/JPY 128.23 EBS early high to 127.35, bounce since to 127.83 Japanese importers on bid sub-127.50, trail down, JPY shorts done paring Good bounce from 127.50 200-HMA area, 128.24 100-HMA resistance Option expiries today both side, more below than above, 126.00-80 $2.5 bln US yields more supportive after bounce from o/n lows, Tsy 10s @2.820%AUDUSD Bias: Bullish above .7300 Bearish below AUD/USD staging a healthy recovery after Monday's vicious sell-off Asian equity markets moving higher and the USD/CNH is well off early highs AUD/USD is up 0.60% from NY close and up 1.25% from 0.7135 Monday low Resistance is at former support at 0.7230/35 with high so far at 0.7224 Key resistance is at the 200-day MA at 0.7293 and break eases pressure Support at 76.4 of 2022 low/high at 0.7131 validated by price action

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Small business owners: don’t duck the need to raise prices

Many small businesses worry about passing on costs, but soaring inflation makes it a matter of survival, says David Prosser.

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Raytheon Technologies: a safe stock for an unsafe world

Defence spending is set to soar – that should be good news for aerospace heavyweight Raytheon Technologies.

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Twitter stock: Elon Musk could be the saviour it needs right now

Elon Musk’s offer for Twitter stock looks increasingly like a done deal. The best option for shareholders may be to take the money and run, says Rupert Hargreaves.

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Seven funds to shield your portfolio from inflation and rising interest rates

It’s a pretty tough time to be an investor right now. The global economy faces a mounting series of challenges, and to make matters worse, central banks are embarking on the most aggressive bout of monetary tightening seen since the financial crisis. 

Unfortunately, there is no sure-fire strategy investors can use to navigate these challenges unscathed. However, there are some options available to help ride out the storm. 

Rising prices are causing havoc with the economy 

Most of the challenges the economy faces today stem from cost-push inflation (as the rising costs of raw materials, for example, feed into rising prices). This is leading to concerns that we’ll see a self-feeding spiral whereby wage inflation takes off (employees demand higher wages to compensate for rising prices, but companies raise prices to cover the rising cost of employment). 

To counter this, central banks are starting to tighten monetary policy significantly for the first time since the financial crisis.  

This has rattled investors for two main reasons. Firstly, by withdrawing liquidity from the system, central banks will push up borrowing costs. This will pile further pressure on companies already dealing with rising costs, which puts downward pressure on profits. 

Secondly, higher interest rates also make equities less appealing compared to other assets. To put it very simply, a company with a 3% dividend yield, for example, looks like a great buy compared to a savings account or a bond paying less than 1.5%, even if the company is not expected to generate any earnings or capital growth. 

(Obviously a savings account carries no risk of losing your money in nominal terms, whereas equities are far riskier, but this is for the sake of illustration).  

However, if rates hit 2.5% (as some analysts are currently projecting) that 3% yield looks far less attractive. 

In other words, rising interest rates not only put pressure on corporate profits, but they also result in the market placing a lower value on those profits. 

Equity performance in periods of high inflation has been mixed

So, how can investors ride out this hostile environment? Just because something has worked in the past doesn’t mean it will work today, but history can act as a good guide. 

In early 2021, a blog from the CFA Institute looked at the relationship between equity prices and inflation between 1947 and 2021. Using inflation data from the St. Louis Federal Reserve and Kenneth R. French Data Library, the blog concluded that inflation did not appear to have any notable effect on US equity returns even when inflation exceeded 10% on a nominal basis. After adjusting for inflation, “real” returns remained positive during periods of rapidly rising prices, but only just.

Sectors that deal with consumers, namely consumer goods and retail, seemed to suffer the most as these organisations generally struggle to pass rising costs onto consumers. The sectors that performed best during periods of high inflation were mining, hydrocarbons, steel and chemicals. 

This data offers some guidance for investors, although I think the figures should be interpreted with caution. While commodity-focused companies might have a record of outstanding performance in periods of rising prices, these sectors are extremely cyclical. 

So if you can time the market, (spoiler alert: most investors can’t) mining stocks and energy stocks can be a great way to ride out periods of high inflation.

Infrastructure and real estate assets as well as inflation-linked bonds and gold are other alternatives. 

Inflation protection with real estate and infrastructure assets 

• SEE MORE The best renewable energy funds to buy now
• SEE MORE Five attractive property funds to buy now

As fellow MoneyWeek writer Max King points out, many property funds offer solid yields with inflation protection. He points to research from John Cahill at brokers Stifel that highlights Secure Income (LSE: SIR) and Supermarket Income (LSE: SUPR) for their long lease terms, inflation-linked rental contracts and yields of 3.8% and 5% respectively. 

There are also plenty of opportunities in the infrastructure sector, which benefits from high replacement costs, inflation-linked contracts and monopolistic qualities. Greencoat UK Wind (LSE: UKW) invests in wind farms across the UK suggesting it is perfectly positioned to profit from the country’s renewable energy investment boom.

3i Infrastructure (LSE: 3IN) owns infrastructure assets around the world, including an interest in the Belfast City airport and Infinis, the largest generator of electricity from landfill gas in the UK. These equities have added 17% and 20% respectively over the past year excluding dividends, compared to a return of 3% for the FTSE All-Share over the same time period. 

These investment trusts offer the ideal mix for investors trying to protect wealth

My preferred investment strategy for the past year has been to own investment trusts focused on wealth preservation, namely Personal Assets Trust (LSE: PNL), Capital Gearing Trust (LSE: CGT) and Ruffer Investment (LSE: RICA). 

These three trusts are focused on protecting investors’ capital, and all three have a fantastic track record of doing so. In recent years they’ve been moving into assets such as precious metals, real estate trusts and inflation-linked securities as inflation fears have grown. 

Capital Gearing Trust has increased its allocation to index-linked government bonds to 35% of assets, and its top two single stock holdings (equities make up 46% of the portfolio) are the landlords Grainger and Vonovia. Capital Gearing does not have much exposure to gold (less than 1%) but the yellow metal is a top holding for Personal Assets. At the end of March, the trust had 12% of net assets invested in gold and gold-related investments, and a slightly lower allocation to equities of 36%. 

Ruffer’s portfolio is a bit more diverse than its peers. Last year, the group made a £1bn profit in the space of five months buying bitcoin and 13% of its portfolio at the end of March was allocated towards “Illiquid strategies and options.” This strategy might be a bit too exotic for some investors, but the trust has certainly achieved its aim of protecting investors’ wealth over the past ten years. 

Disclosure: Rupert Hargreaves owns shares in Personal Assets Trust and Capital Gearing Trust. 

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The pound is falling hard – is a UK recession on the cards?

The pound has tanked over the last few days, hitting its lowest level against the US dollar since September 2020 (by the time you read this, it might be more like July 2020). 

Markets are suddenly more worried about recession than they are about rocketing inflation.

If it’s any consolation, this isn’t just a UK problem. However, the UK does seem to be a bit ahead of the pack.

The Bank of England is caught between a rock and a hard place

Inflation remains high in the UK and it’s almost certain to rise again when figures for April come out next month.

Usually this would imply significantly higher interest rates. The Bank of England’s job is to keep inflation running between 1% and 3%, with the closer to 2% the better. And for a brief moment, that’s what everyone thought would happen.

But now markets are thinking better of it. They don’t think the Bank of England will be able to raise interest rates because we’ve just had some woeful economic data.

UK retail sales for March were awful, dropping by 1.4% compared to the previous month, a much worse figure than expected. Meanwhile, consumer confidence has tumbled. It’s close to its lowest level since records began (and that data goes back almost 50 years, so it’s pretty awful).

As a result of this grim data, markets are now much less convinced that the Bank of England will raise interest rates by anything like as much as they’d thought.

In turn, the pound has slid heavily – particularly against the US dollar, which is still being propped up by investors who expect the Federal Reserve to be pretty aggressive with rate hikes this year.

Of course, this still means you have an inflation problem. On that point, you might well argue: “But what can – or even should – the Bank of England do to offset soaring energy prices? After all, aren’t they just a tax on consumers?” And you would be right.

That said, my retort would be to point out that in the 1990s and early 2000s some of us were saying: “But what can – or even should – the Bank of England do to offset rampant disinflation caused by China joining the global capitalist community? Don’t collapsing consumer goods prices represent a demand stimulus to which it is unnecessary to add far cheaper credit and thus rip-roaring house prices on top?”

In short, I’m sure that the Bank of England realises that not every problem is a nail. However, it has been given naught but a hammer to wield against said problem.

Interest rates are a blunt instrument, and maybe inflation targeting should adjust to underlying secular conditions rather than be set at one level the whole time. But it’s kind of late in the day to be having this revelation.

Can anything save the UK from recession?

Anyway, let’s park that little philosophical difference and get back to the real world of money.

Investors are right to be worried. The UK is a consumer-led economy and consumers are under a great deal of pressure. For most of us, electricity is not an optional extra. In my experience, people are pretty parsimonious with their energy bills, so I can’t imagine that there’s a lot of slack in the system. 

The more you have to spend on “needs”, the less you have to spend on “wants”.

So are we looking at a recession?

The odds are rising, there is no sense in pretending otherwise. That said, we still have a few factors on the other side that might help.

If consumers are feeling the squeeze, they either need to cut back or get extra money from somewhere. There are a few sources of the latter.

One, employers. The labour market remains tight. There’s still a lot of talk of employers having to push up wages to hire. If we start to see “real” (after-inflation) wage increases, that would be good news (not necessarily for shareholders as they have to pay for it, but it’s certainly the best way to avoid recession).

Two, savings. There are still plenty of savings built up in aggregate. The tricky thing is that those are unevenly distributed. So the same people who are feeling the pain from prices rises most are probably not the same people who have the savings.

Three, credit. Consumers are not over-borrowed relative to history, so there’s room for them to borrow more money to maintain their standards of living.

The last two factors are short-term solutions; the longer-term issue is really about whether the cost of living squeeze eases up at all.

I can see a scenario in which commodity prices peak and start to ease off (China’s current woes with stop-start coronavirus shutdowns are likely to hit commodity prices in the short term), but it’s harder to see why inflationary pressures will disappear altogether.

What might be possible is that we see bond yields hit a short-to-medium term top as energy prices peak for now, and central banks pull back from tightening any further.

If that happens, some of the concern consumers feel about inflation coinciding with rising mortgage rates might drop away, and if we can get ongoing strength in the labour market as well, the ideal scenario of wages rising in “real” terms might come about.

But it’s going to be touch and go, I feel. We’ll keep you up to date – if you haven’t yet subscribed to MoneyWeek magazine, I suggest you do so now and get your first six issues free.

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Natural Gas Futures (NG1!), H1 Potential for Bullish Bounce

Type: Bullish BounceKey Levels:Resistance: 6.607Pivot: 6.260Support: 6.013Preferred Case:Price is moving nearer to the pivot level. We are expecting the price to potentially bounce off from our pivot level of 6.260 in line with 61.8% Fibonacci projection and -27.2% Fibonacci expansion towards our 1st resistance level of 6.607 which is in line with 38.2% Fibonacci retracement and 61.8% Fibonacci projection.Alternative Scenario:Otherwise, the price might break our pivot structure and trigger a dip to the 1st support level of 6.013 in line with the 78.6% Fibonacci projection and -61.8% Fibonacci expansion.Fundamentals:No major news.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/natural-gas-futures-ng1-h1-potential-for-bullish-bounce"
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Market Spotlight: NZDCAD Approaching Final Target

NZCAD Sell-Off DeepensThe NZDCAD short trade issued ahead of the recent BOC meeting is developing nicely with price close to hitting the final target at .8351. The Canadian Dollar has been much stronger in the wake of the meeting, which saw the BOC hike rates by .5%. However, the .8351 level marks an important level (current YTD low) and as such it will be prudent to monitor how price interacts with this level on the first attempt. More aggressive bears can hold onto shorts here, however if we breakdown below the level there will be opportunities for fresh short trades in the coming weeks.Keep an Eye OnNZD is currently suffering more than CAD as a result of the risk-off moves we are seeing across the board. Equities and commodities prices are under pressure with USD rallying firmly on Monday. If the current dynamic continues, we can expect CAD to remain stronger than NZD near-term. However, if oil prices move materially lower from here this might affect a shift in sentiment.

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NZDUSD H4 | Potential for Bullish Bounce

Type: Bullish BounceKey Levels:Resistance: 0.67284Pivot: 0.65331Support: 0.63834Preferred Case:We see the potential of bullish bounce from pivot level of 0.65331 in line up with 161.8% fibonacci extension and 78.6% fibonacci projection towards the 1st resistance level of 0.67284 in line with 38.2% fibonacci retracement.Alternative Scenario:Alternatively, price might break through the key pivot level and trigger a dip towards the 1st support level of 0.63834 which is in line with previous horizontal swing low support.

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Precious Metals Monday 25-04-2022

Gold & Silver Fall As USD Strengthens on Hawkish Fed ViewsThe yellow metal remains under pressure this week, opening with heavy selling in Europe, as traders digest recent hawkishness from the Fed. Fed chairman Powell last week confirmed that the Fed is looking to hike rates by 0.5% in May and is committed to aggressively tightening policy this year in a bid to bring down inflation. On the back of these comments, the Dollar has been well bid with traders anticipating that the .5% hike in May will likely be the first in a series of larger-than-usual rate hikes.While gold is under pressure from the rise in USD, it is yet to be seen the extent to which the continued sell-off in equities will help underpin demand for the precious metal. Along with weakened demand as a result of a firmer USD and increased Fed hawkishness, risk appetite remains weaker due to fresh fears over the conflict in Ukraine. Reports last week of an intensified Russian assault on the easter regions there have been followed by news this week of Ukrainian airstrikes against sites in Russia, raising fears of yet a further escalation in the violence.Silver prices have been equally subdued with the metal falling to its lowest level since mid-February. With the US Dollar expected to continue to rally into the May FOMC meeting, the near-term outlook for both metals looks skewed towards further downside. If the Fed does indeed deliver with a larger hike in May, along with signalling further aggressive action to come, metals are likely to remain under pressure over Q2.Technical ViewsGoldGold prices are now once again testing the 1919.92 support zone. We have seen this level acting as a floor over recent weeks. However, with price turning lower again followed the latest failed run at 2014.32, the level is at risk of breaking. With both MACD and RSI bearish, if we do see a move below this level, bears can expect to see a test of deeper support at 1871.04, followed by the 1826.71 level, where we also have the bull channel support sitting.SilverThe latest move north of 25.5384 was seen running into further, heavy selling pressure. With price having now dipped back below the 24.0073 level, the focus is on a test of the rising trend line and 22.3205 support zone next. Both MACD and RSI have turned bearish now, putting the focus on further downside near term unless bulls can get back above 24.0073 and hold.

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Older people may own their own home, but the young have better pensions

I’m going to start with some very good news: numbers out from the ONS on workplace pension participation in the UK show that 22.6 million employees, or 79%, are now enrolled in a pension scheme.

Before auto-enrolment, that number was only 47% – and a genuinely pathetic 32% in the private sector. A total of 22.6 million people saving into pensions adds up to real money: in 2019-2020 savers made combined pension contributions of £31.3bn – up from £27.9bn the year before.

These pension savings will keep growing (the under-35s are contributing an average of £245.40 a month) and keep compounding. They will also stay with their owners. Fifty years ago, if you moved jobs, you forfeited your pension rights with your previous company when you walked out the door: you lost your employer’s contributions, investment gains and got back only the cash you put in – with income tax deducted.

That made leaving anywhere after more than a couple of years a very expensive decision – one reason, by the way, why labour mobility was lower back then – it was less corporate loyalty than pension lock in.

Today there might be a trying hour of admin involved in shifting your assets, but your pension is always yours. If you and your various employers contribute to it for 30-odd years it should also be well worth having – it will have compounded to a level that will support a reasonable living standard, particularly if the state pension stays at its current level in real terms. Today’s young are less likely than their parents to retire to a home of their own but are more likely to finish working with a private pension income, which is nice.

The UK has remarkably well-funded pensions

Our system isn’t perfect. Outside the public sector – where employees get defined-benefit pensions – set payments based on their previous salaries – most of us have defined-contribution pensions which are more dependent on stockmarkets than is ideal.

There is also a not-getting-the-detail problem. The latest “Show Me My Money Report” from Interactive Investor suggests that around half of those in pension schemes don’t know how much they contribute to them or how much is already in them.

Three-quarters of pension savers also have no idea what they pay their pension provider – there is, says Interactive Investor, an “engagement gap” here, one that over an adult lifetime of pension saving “could add up to an average of around £120,000 in unnecessary fees and missed investment growth.” 

That’s real money. But even so it is hard to overstate just how well funded UK retirements are relative to those in other countries. OECD data shows that pension savings in the UK come to around 126% of GDP, making our system one of the best funded in the world. Some countries are in even better shape – Australia, Iceland and Switzerland being the stand outs.

But most are definitely not: in the likes of Germany, France and Italy the equivalent numbers are all under 10%. This partially reflects the fact that they rely on pay-as-you-go, earnings-linked state-backed pensions. That’s fine if you trust government finances to be good enough to keep paying out. Me? I’d take private funded over public unfunded any day.

But many older people don’t have much in their pension pot

The bad news – you knew it was coming – is that there are gaps, namely those working in the private sector after corporate defined-benefit pensions began to disappear and before auto-enrolment. I refer you back to the 32%.

Some of them will have lovely pensions, of course – they may have been earning large amounts, have understood how pensions work and been saving into personal wrappers in the days when there were no limits on annual or lifetime contributions (nor on the amount of tax you could claim back) – and when one of the greatest bull markets of all time was getting under way.

But many others will have nothing of the sort: the average pot size among the over-55s at the moment is £132,400 – and that will be very unevenly distributed.

On the plus side, what the majority of those without an actual pension will have is a house. One of the greatest housing booms ever has been under way in parallel with the equity bull market, and 75% of the over-65s in the UK own their own home outright, with no mortgage, says the ONS.

How about that? The very same group that has been horribly disadvantaged when it comes to pension provision has been hugely advantaged when it comes to physical asset owning. 

For retirees with little pension, there’s always equity release

This brings us neatly to equity release – the obvious way to turn a house into an income stream. In an ideal world it makes more sense to downsize than to even look at this – take the cash you get out and use that to create an income.

But clearly a lot of older people would rather not – which is why after a Covid slowdown the equity release market is back. Total lending to the over 55s grew 24% to £4.8bn year on year in 2021 with average loan sizes also on the up according to the Equity Release Council.

Equity release has a well-deserved reputation for being a bit dodgy, as the Financial Conduct Authority found in an investigation.

Everyone will have heard the stories of tiny loans coming with awful interest rates that compound to eat up the entire value of a house – and sometimes more. But times have changed – a bit. Rates are lower, you can arrange to take money out of your home by regular drawdowns rather than one lump sum (which cuts the total interest cost), and most lenders have guarantees that there will be no negative equity.

Also, after the rules were put on hold during the pandemic, it is once again compulsory for anyone taking out an equity release plan to have at least one face-to-face meeting with a solicitor before signing anything.

You should see if you can get an ordinary mortgage before you look at equity release, as these are cheaper and more flexible. You should look very carefully at any early repayment penalties and watch for fees as you go (paying them upfront rather than adding them to a compounding debt); you should be aware that if house prices fall your loan might feel uncomfortable; and you should definitely not touch any of this without a genuinely good financial adviser by your side. Industries don’t get dodgy reputations for nothing.

But one thing you shouldn’t worry about is leaving a debt-free house to your kids. They’ll have a pretty good pension to fall back on.

• This article was first published in the Financial Times

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UK RPI and CPI inflation

A chart showing the latest RPI and CPI inflation figures for the UK.

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AUDUSD H4 | Potential For Bullish Bounce

Type: Bullish BounceKey Levels:Resistance: 0.7284Pivot: 0.71638Support: 0.70946Preferred Case:Price is near the key pivot level. We see the potential of a bullish bounce from pivot level of 0.71638 in line with 100% fibonacci projection towards the 1st resistance level of 0.7284 in line with 38.2% fibonacci retracement and 100% fibonacci projection.Alternative Scenario:Otherwise, price might break the key pivot level to trigger a dip towards the 2nd support of 0.70946 which is in line with 78.6% fibonacci retracement.

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ETHUSD H4 | Potential For A Drop

Type: Bullish BounceKey Levels:Resistance: 2968Pivot: 2890Support: 2717Preferred Case:On the H4, with price moving below the Ichimoku cloud, we have a bearish bias that price will drop from our pivot at 2890 where the pullback resistance is to our 1st support at 2717 in line with the daily horizontal overlap support and 161.8% Fibonacci extension.Alternative Scenario:Alternatively, price may break pivot structure and head for 1st resistance where the horizontal pullback support at 2968.Alternatively, price may break pivot structure and head for 1st resistance where the horizontal pullback support at 2968.

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